Managerial Accounting: P24-7 The accountants for Polyglaze, Inc., have developed the following

Important Reminder!!! There might be other versions of this problem - amounts and dates have been changed - so please make sure you review and compare this tutorial to the problem in your homework. Even with different amounts, format and way of solving the problem is still the same so pleases be guided accordingly.

Managerial Accounting
Problem 24.7 Computing and Journalizing Cost Variances
The accountants for Polyglaze, Inc., have developed the following information regarding the standard cost and the actual cost of a product manufactured in June:
Standard Cost Actual Cost
Direct materials:
Standard: 10 ounces at $0.15 per ounce 1.50
Actual: 11 ounces at $0.16 per ounce 1.76
Direct labor:
Standard: .50 hours at $10.00 per hour 5.00
Actual: .45 hours at $10.40 per hour 4.68
Manufacturing overhead:
Standard: $5,000 fixed cost and $5,000 variable cost for 10,000 units normal monthly volume 1.00
Actual: $5,000 fixed cost and $4,600 variable cost for 8,000 units actually produced in June 1.20
Total Unit Cost $7.50 $7.64
Units produced 8,000

Instructions
Negative amounts should be indicated by a minus sign. Omit the "$" sign in your response.)
a. Compute the materials price variance and the materials quantity variance, indicating whether each is favorable or unfavorable. Prepare the journal entry to record the cost of direct materials used during June in the Work in Process account (at standard).
b. Compute the labor rate variance and the labor efficiency variance, indicating whether each is favorable or unfavorable. Prepare the journal entry to record the cost of direct labor used during June in the Work in Process account (at standard).
c. Compute the overhead spending variance and the overhead volume variance, indicating whether each is favorable or unfavorable. Prepare the journal entry to assign overhead cost to production in June.
Powered by